Stocks Steady Before the Open After Tech-Fueled Selloff, FOMC Meeting on Tap

March S&P 500 E-Mini futures (ESH25) are up +0.09%, and March Nasdaq 100 E-Mini futures (NQH25) are up +0.16% this morning, stabilizing after yesterday’s dramatic selloff, while investors awaited the start of the Federal Reserve’s two-day policy meeting as well as a flurry of U.S. economic data and corporate earnings reports.

The dollar strengthened after U.S. President Donald Trump said he preferred significantly larger across-the-board tariffs than the 2.5% reportedly favored by new Treasury Secretary Scott Bessent. Trump also stated that he would soon impose tariffs on foreign-produced semiconductors, pharmaceuticals, and certain metals to encourage manufacturers to produce domestically. “I have it in my mind what it’s going to be but I won’t be setting it yet, but it’ll be enough to protect our country,” Trump told reporters Monday night.

In yesterday’s trading session, Wall Street’s main stock indexes closed mixed, with the benchmark S&P 500 sliding to a 1-week low and the tech-heavy Nasdaq 100 slumping to a 1-1/2 week low. Chip stocks tumbled after the emergence of Chinese startup DeepSeek sparked concerns about the potential demand for the most advanced chips and data centers, with Nvidia (NVDA) plunging nearly -17% to lead losers in the Dow and Broadcom (AVGO) sinking more than -17%. Also, nuclear power stocks, anticipated to benefit from rising demand driven by energy-intensive data centers for AI technology development, came under pressure, with Vistra Corp. (VST) plummeting over -28% to lead losers in the S&P 500 and Constellation Energy (CEG) dropping more than -20%. In addition, SoFi Technologies (SOFI) fell over -10% after the lender issued below-consensus full-year adjusted EBITDA guidance. On the bullish side, AT&T (T) climbed more than +6% after the company posted upbeat Q4 results.

Economic data released on Monday showed that U.S. new home sales rose +3.6% m/m to 698K in December, stronger than expectations of 669K.

“What was shaping up to be a big week in the markets got even bigger with the disruption in the AI space,” said Chris Larkin at E*Trade from Morgan Stanley. “That could make this week’s megacap tech earnings even more critical to market sentiment.” 

The Federal Reserve kicks off its two-day meeting later in the day. After cutting rates three times in late 2024, Fed officials are widely expected to keep them unchanged on Wednesday, given signs of a strong U.S. economy. Market watchers will likely focus on Fed Chair Jerome Powell’s post-policy meeting press conference for any additional clues about when interest rates might be lowered further. 

Fourth-quarter corporate earnings season is in full swing, with investors awaiting new reports from notable companies today, including General Motors (GM), Starbucks (SBUX), Lockheed Martin (LMT), Stryker (SYK), Royal Caribbean (RCL), and RTX Corp. (RTX). According to Bloomberg Intelligence, companies in the S&P 500 are expected to post an average +7.5% increase in quarterly earnings for Q4 compared to the previous year.

On the economic data front, all eyes are focused on the U.S. Conference Board’s Consumer Confidence Index, which is set to be released in a couple of hours. Economists, on average, forecast that the January CB Consumer Confidence index will stand at 105.7, compared to last month’s figure of 104.7.

Also, investors will focus on the U.S. S&P/CS HPI Composite - 20 n.s.a. Economists expect the November figure to be +4.2% y/y, unchanged from October. 

U.S. Durable Goods Orders and Core Durable Goods Orders data will be closely monitored today. Economists forecast December Durable Goods Orders at +0.3% m/m and Core Durable Goods Orders at +0.4% m/m, compared to the prior figures of -1.2% m/m and -0.2% m/m, respectively.

The U.S. Richmond Fed Manufacturing Index will be released today as well. Economists estimate this figure to come in at -13 in January, compared to the previous value of -10. 

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.559%, up +0.68%.

The Euro Stoxx 50 Index is up +0.48% this morning, rebounding from a selloff in the previous session, with investors digesting corporate earnings reports ahead of the European Central Bank’s meeting later this week. Utilities and media stocks gained ground on Tuesday. Data from the national statistics agency Insee released on Tuesday showed that France’s consumer confidence indicator rose to a 3-month high in January, indicating that lower inflation and rates are starting to foster a more favorable spending environment. Separately, an ECB survey revealed that Eurozone banks tightened firms’ access to credit last quarter and anticipate further tightening in the first three months of 2025. Meanwhile, investors are looking ahead to the ECB’s policy verdict on Thursday, with the central bank widely expected to cut its benchmark interest rate by 25 basis points as the Eurozone economy struggles to recover. In corporate news, Sartorius Ag (SRT3.D.DX) surged over +12% after the biopharmaceutical firm said in a preliminary full-year release that it achieved its profitability targets and provided a “cautiously positive” outlook for 2025. Also, Siemens Energy Ag (ENR.D.DX) gained more than +3% after reporting stronger-than-expected preliminary quarterly results. 

France’s Consumer Confidence data was released today.

The French January Consumer Confidence arrived at 92, stronger than expectations of 90.

Japan’s Nikkei 225 Stock Index (NIK) closed down -1.39%, while mainland China’s financial markets were closed for a holiday.

Japan’s Nikkei 225 Stock Index closed lower today, continuing its decline from the previous session. Chip stocks tied to the U.S. AI value chain plummeted on Tuesday amid worries that Chinese startup DeepSeek might challenge the supremacy of U.S. AI leaders. Heavy industrial stocks also weighed on the index. At the same time, real estate stocks outperformed as the yield on the 10-year Japanese government bond fell. Bank of Japan data released on Tuesday showed that a key indicator of Japan’s service-sector inflation hit 2.9% in December, driven by price increases across various services like accommodation and transportation, keeping alive expectations of additional rate hikes by the central bank. Meanwhile, former BOJ board member Makoto Sakurai said on Tuesday that the BOJ is likely to raise interest rates again around June or July and aim to increase its policy rate to at least 1.5% within the next two years, citing factors like broad-based wage hikes, expectations of continued price rises, and robust economic growth in Japan. In other news, the Japanese government on Tuesday nominated Junko Koeda, a professor of political science and economics at Waseda University, to join the BOJ’s nine-member board. In corporate news, Premium Group gained over +1% after the company said it expects to receive 3.86 billion yen in dividends from its subsidiaries by March 31st, which will be recorded as operating revenue. Investors are now focused on Japan’s inflation, labor, and other economic data, scheduled for release later in the week, to gain additional insights into the BOJ’s monetary policy outlook. The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +7.29% to 23.83.

The Japanese December Corporate Services Price Index came in at +2.9% y/y, weaker than expectations of +3.2% y/y.

China’s Shanghai Composite Index was closed today for the Lunar New Year holidays. Mainland China’s financial markets will reopen on Tuesday, February 4th.  

Pre-Market U.S. Stock Movers

Chip stocks are moving higher in pre-market trading after yesterday’s sharp selloff. Nvidia (NVDA) is up over +3%, and Broadcom (AVGO) is up more than +2%.

Brown & Brown (BRO) rose over +3% in pre-market trading after reporting better-than-expected Q4 results. 

Ciena (CIEN) climbed more than +4% in pre-market trading after JPMorgan upgraded the stock to Overweight from Neutral with a price target of $88.

Ecolab (ECL) gained about +1% in pre-market trading after Morgan Stanley upgraded the stock to Overweight from Equal Weight with a price target of $280.

Graco (GGG) fell over -3% in pre-market trading after the company reported weaker-than-expected Q4 results.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Tuesday - January 28th

Rtx Corp (RTX), Stryker (SYK), Boeing (BA), Lockheed Martin (LMT), Starbucks (SBUX), Chubb (CB), Royal Caribbean Cruises (RCL), General Motors (GM), PACCAR (PCAR), Kimberly-Clark (KMB), Sysco (SYY), Synchrony Financial (SYF), Packaging America (PKG), Manhattan Associates (MANH), F5 Networks (FFIV), Logitech (LOGI), Renaissancere (RNR), BXP Inc (BXP), Houlihan Lokey Inc (HLI), Qorvo Inc (QRVO), Invesco (IVZ), Popular (BPOP), CommVault (CVLT), Nextracker (NXT), UMB Financial (UMBF), Littelfuse (LFUS), Stride (LRN), Axos Financial (AX), Ashland Global (ASH), Polaris Industries (PII), JetBlue (JBLU), Provident (PFS), Renasant (RNST), Trustmark (TRMK), LendingClub (LC), First Commonwealth Financial (FCF), Adient (ADNT), Veritex Holdings Inc (VBTX), XPLR Infra LP Unt (NEP), Xerox (XRX), MAC Copper (MTAL), Camden (CAC), World Acceptance (WRLD), Hanmi (HAFC), GBank Financial Holdings (GBFH), Alerus Fin (ALRS), Flushing (FFIC), Galiano Gold (GAU), Primis Financial (FRST), Provident (PROV).